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Do You Know What Is Actually Causing Turnover in Your Organization?

October 11, 2016

employee-turnover.jpgIn many organizations across the globe, turnover is a major pain point. We all know that there are devastating outcomes associated with losing good employees. These range from monetary costs that are estimated to be between 1.5 and 2.5 times the leavers’ salary to other less tangible outcomes such as increased stress and workload of remaining employees, loss in productivity, client loss, and turnover behavior becoming contagious resulting in more departing employees.

More often, organizations are telling us that turnover is becoming an issue. One factor that is contributing to the higher rates of turnover for many employers is the ease with which individuals are able to find and apply for jobs. As the unemployment rate continues to drop there are more and more jobs available.

Additionally, as technology continues to advance, gaining access to these jobs is becoming increasingly easy. Further, applying to these jobs is easy, as nearly everything is online or automated in some way. In order to prevent these factors from pushing employees to look elsewhere for jobs, organizations need to understand what is driving turnover within their workforce and implement interventions to address those drivers.

This seems fairly easy to do, right? WRONG. Organizations often allocate time, resources, and money to address a turnover issue BEFORE they even know what is driving the issue. Organizational leaders often think they have insight into what is driving turnover in their workforce and dedicate resources toward those hypothesized causes, failing to see a return on their investment.

It would be like diagnosing yourself with cancer and buying and taking chemo medications without ever seeing a doctor. Chances are you just spent a lot of money and experienced some nasty side effects without seeing any improvement in your condition because in actuality you only had a common cold.

Throwing money and resources at a problem, especially a complex and complicated problem like turnover, without knowing what is causing that problem is likely not a great strategy to guarantee yourself positive results. But we see organizations doing this all of the time. Chances are once they reach us they have spent a great deal of money, have tried a number of interventions, are shocked that they have not noticed improvement, and are desperate for a solution. It does not have to be that hard.

There are three main categories of turnover drivers:

  1. Individual

  2. Internal

  3. External

Individual Drivers

These are traits that employees possess that make them more likely or less likely to turnover. These traits include things like impulsivity, adaptability, self-esteem, and how well they fit within the organization’s culture and environment.

Combating these types of drivers is as simple as implementing a selection assessment or process that identifies individuals’ levels on these traits and selects out the highest risk or poorest fit candidates. If you already have a solid selection system in place that assesses these types of traits and fit, this is likely not a main driver of turnover within your organization and you should focus your resources elsewhere.

Internal Drivers

Internal drivers of turnover are factors within the organization that lead to an individual wanting to quit. There are countless internal drivers of turnover, but some of the primary factors are things like pay, benefits, opportunities for advancement and growth, leadership, the working environment, job design, workload, flexibility, and the organizational culture, just to name a few. You may be thinking with so many potential drivers of turnover, how would we ever know where to dedicate our attention?

Well, there are multiple ways to gather data on these drivers. The first is to simply ask your employees what triggers thoughts or intentions to leave. Gather this data via surveys, focus groups, and/or interviews from individuals that occupy the roles where you are seeing the highest rates of turnover. Conduct exit interviews with individuals who have already made the decision to leave and ask them what led to that decision. It is always interesting to see that what organizational leaders are convinced is driving turnover is not even close to what employees say is driving turnover. Listen to your employees; they are honest and have a lot of useful information to share.

External Drivers

Finally, external drivers of turnover are factors that are outside of the organization. These drivers consist of things like the local unemployment rate, competitors in the industry, the organization’s reputation, access to applicants, and location. These things are often not easily changed, but you can obtain data to see how you stack up against your competition in order to identify areas where you have the potential to excel.

You can gather this data by doing a market analysis to see whether or not you are an employer of choice, and if not, what you can do to improve your standing. If a competitor down the road is paying their employees slightly more for the same job and you are losing employees to them, you may be able to dissuade more employees from leaving by matching that pay scale. Additionally, if you are matching the pay scale and have a better culture, employees will be even less likely to quit. In other words, covering as many of the 3 types of turnover drivers as possible will have the most impact.

The main takeaway

The overall message is: do not throw time, money, and resources at a problem that you do not fully understand. Do yourself a favor by taking the time to investigate and explore the issue before you implement a solution. It will save you a lot of time and money when following this approach and we can help you accomplish this. 

Turnover is a tough nut to crack and is a struggle for many organizations, but it doesn’t have to be that hard.

Reducing Turnover Starts with Hiring & Developing Great Leaders

Alli Besl, Ph.D. Alli Besl, Ph.D. was a Research Consultant based in the Pittsburgh office of PSI. Her areas of expertise include: employee turnover, selection and recruitment.